'We need to be cautious in cutting rates,' says ECB's Lagarde

Traders have ramped up bets on faster rate cuts from the ECB after a host of policymakers warned about the risk of undershooting

The President of European Central Bank Christine Lagarde (AP Photo/Michael Probst)

The European Central Bank (ECB) will need to be cautious when deciding on further interest rate reductions and take its cue from incoming data, ECB President Christine Lagarde said on Wednesday.

Traders have ramped up bets on faster and potentially bigger rate cuts from the ECB after a host of policymakers warned about the risk of undershooting the central bank's 2% inflation target - a remarkable change in tone after a two-year campaign to rein in prices.